B. Mehta and Company

This is a petition for the winding-up by the court of a company named Edward Textiles Ltd., which was originally incorporated as Edward Sassoon Mills Ltd. as far back as the year 1910.

The petitioners have in paragraph 6 of the petition stated that, on various dates between August, 1965, and February, 1967, they supplied steel reeds, heals and striking combs to the said company, for which a sum of Rs. 8,889.90 remains unpaid by the company. In the same paragraph, it is stated that, by their notice dated April 7, 1967, the petitioners demanded payment of their dues, and stated that if the same were not paid within three weeks after service of the said notice, the said company would be deemed to be unable to pay its debts within the meaning of sections 433 and 434 of the Companies Act, 1956, and on that footing a winding-up petition would be presented to the court.

It is common ground that the petitioners'' claim has not been satisfied by the said company within the statutory period laid down in section 434(1)(a) of the Companies Act, and, in fact, a cheque for Rs. 1,410.80, forwarded to the petitioners by the said company after the notice of demand dated April 7, 1967, was addressed to them, was dishonoured by non-payment. The petitioners have, therefore, filed this petition for a winding-up of the said company by the court. The petition has been admitted and duly advertised and a provisional liquidator has also appointed by the court on July 7, 1967, by my brother Thakkar J. The petition has therefore come up before me for hearing to-day.

Mr. Buch stated, at the commencement of the hearing to-day, that he was appearing for the Rashtriya Mill Mazdoor Sangh, but I have not allowed him to appear for that body, which, in my opinion, has no locus standi on a petition for winding up, on which only persons interested as creditors or contributories are entitled to appear. Mr. Buch thereupon filed his attorney''s appearance for six workers of the said company who claim to be creditors in respect of wages due to them, and that appearance has been taken on file by me.

Mr. G. G. Bhatt sought to appear on behalf of the Bombay Textile Clerks'' Union as well as on behalf of one individual worker who claims to be a creditor in respect of his wages. I have allowed him to appear in respect of the individual worker concerned, but, for the reasons already stated by me in the preceding paragraph, in my opinion, the Bombay Textile Clerks'' Union has no locus standi to appear before me in the present proceedings, and I have not allowed him to file his appearance for the said Union.

Mr. Buch has applied for an adjournment for four weeks on the ground that the Government is making efforts to have the said Mill-company sold as a going concern, which he states would be to the advantage of everybody, as, in the event of a winding-up order being made by me to-day, the said company would be subjected to a liability to the tune of several lakhs in respect of the retrenchment compensation payable to workers.

First and foremost, there is no material before me whatsoever, except the oral statement made by Mr. Buch with regard to the alleged efforts that are being made by the Government to find a purchaser of the said company as a going concern. Mr. Buch tried to refer to some statements alleged to have been made on the floor of the legislature, but I have prevented him from referring to the same, as I am only concerned with the material placed before me on affidavits. Mr. Buch was thereupon prepared to place those facts on affidavit if he was given a short adjournment for that purpose, but I do not think any useful purpose would be served by granting that adjournment. If any offer is to be made for the purchase of the mills as a going concern, it must be made to the company itself and to none else. I do not see where the Government comes in the picture at all. Mr. Madon, who appears for the company, has stated categorically that no party has even made an approach to the company for purchasing the mills as a going concern. There is, therefore, no basis whatsoever on which Mr. Buch''s application for adjournment can be granted.

Mr. Cooper for the petitioners has contended that, once the statutory ground u/s 434(1)(a) of the Companies Act is made out, and the company itself not only does not dispute the claim, but admits that it is in a hopelessly insolvent position, a winding-up order must follow. Reference may be made in this connection to the decision of an appellate bench of this court in the case of Bachharaj Factories Ltd. v. Hirjee Mills Ltd. [1955] 25 Comp. Cas. 227; 57 Bom. L.R. 378. I am also impressed by the argument of Mr. Cooper that, if at all a winding-up order was to be opposed before me to-day, it was for the company to oppose it, or to apply for adjournment, but it is not open to another creditor to come forward and apply for adjournment of the hearing of this petition on a ground of which the company itself knows nothing.

In the result, I make a winding-up order in terms of prayer (a) of the petition. The provisional liquidator already appointed is confirmed as liquidator of the company.

I direct that the winding-up order made by me be advertised in the "Times of India", the "Bombay Samachar" and the "Nava Kal", and also in the Maharashtra Government Gazette.

Costs of the petitioners to come out of the assets of the company. Costs of the company, as between attorney and client, also to come out of the assets of the company.

Mr. Buch and Mr. Bharucha have applied for one set of costs being granted out of the assets of the company between them as supporting creditors. I am afraid, in view of the fact that the whole endeavour of Mr. Buch, which was supported by Mr. Bharucha, was to see that an adjournment of the hearing of this petition was granted with a view to preventing an ultimate winding-up of the company, I do not think they could be said to be in the position of those supporting the petitioning creditors before me to-day. I have, therefore, declined to make any order for costs in their favour.

Winding up order made.